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FOR IMMEDIATE RELEASE
SINGAPORE - FEBRUARY 24, 2017 12:15 PM (EST)
A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of General Insurance Corporation of India (GIC Re) (India). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect GIC Re’s adequate risk-adjusted capitalization and good business profile in its domestic market. GIC Re is the largest domestic reinsurer in India and benefits from the obligatory cessions of direct insurers in India. In addition, GIC Re has a geographically diversified underwriting portfolio.
An offsetting rating factor is the potential strain on GIC Re’s risk-adjusted capitalization due to increasing underwriting leverage, partly attributable to rapid growth in crop premiums. As part of a new nation-wide effort by India’s government to extend insurance coverage to farmers, crop insurance now makes up a substantial proportion of the market. Although the scheme is government-subsidized, its profitability in the long run remains to be seen. Additionally, recent regulatory changes that facilitate the entry and operations of foreign reinsurers also could increase competition for GIC Re in its domestic market.
Positive rating momentum could result if GIC Re is able to improve consistently its underwriting performance while maintaining its risk-adjusted capitalization.
Negative rating momentum could result from material deterioration in risk-adjusted capitalization or performance.
Ratings are communicated to rated entities prior to publication. Unless stated otherwise, the ratings were not amended subsequent to that communication.
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
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